Victoria’s Yallourn coal power plant to close early as clean shift slashes prices

Victoria’s largest coal-fired power station, Yallourn, will close four years earlier than scheduled, casting doubt over the future of hundreds of jobs.

EnergyAustralia is licensed to run the brown coal-burning power plant in the Latrobe Valley east of Melbourne until 2032. But the company told staff on Wednesday it would now shut in mid-2028. Yallourn supplies up to 22 per cent of Victoria’s electricity demand and employs about 500 workers.

EnergyAustralia’s Yallourn coal-fired power plant in the Latrobe Valley.Credit:Luis Enrique Ascui

EnergyAustralia is planning a multimillion-dollar support package for those affected.

The decision comes as a flood of new renewable energy has been driving down daytime power prices and piling enormous pressure on Australia’s fleet of ageing coal-fired power plants, which are far more expensive to operate and, increasingly, struggling to compete.

New figures reveal baseload electricity prices in Victoria have crashed 70 per cent from about $80 a megawatt-hour in March 2020 to $24 this month. In New South Wales, prices have more than halved to $38.

Price falls across the nation’s main grid have been driven largely by the pandemic-led downturn in energy demand, a cooler-than-usual summer and the accelerating rollout of wind and solar farms and rooftop solar panels.

While demand is recovering, the pressure caused by the influx of cheap renewable energy continues. With four gigawatts of new wind and solar already committed to enter the grid between 2021-23 and state governments in Victoria and NSW mapping out ambitious pro-renewables policies, energy analysts are projecting a “huge uplift” in renewable penetration that could keep prices depressed.

Ultra-low wholesale prices, now sitting at levels not seen since 2015, have prompted top Australian energy supplier AGL to slash $2.7 billion off the value of its assets and warn of the elevated risk of a “supply-side response”.

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